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How to Open an Arcade Business

Updated on June 26, 2012

I ran an arcade for years, listen to me.

The outside of my old arcade.
The outside of my old arcade. | Source

In a Nutshell, Don't.


Don’t.

Why are you still there? I told you not to open an arcade.

Really. I’m not kidding.

So, you’re still interested? Go visit a major theme park, a Family Entertainment Center with go-karts, mini-golf and such, and a Chuck E. Cheese’s. Ok, now go visit a Dave and Buster’s.

You’re still interested? Ok, well, I guess I can tell you how it works.

What Games Make Money? Find Out!

A kid threatens the old mascot at the arcade.
A kid threatens the old mascot at the arcade. | Source

Research Which Games Make Money


Step 1: Subscribe to RePlay, Play Meter, and Vending Times Magazines. Keep an eye on what’s making money. Look in the back or at those online ads. What are games going for? Really, you thought they’d be $50 like that Tetris game you picked up at an auction last year? Nope. What’s the upper range for a game? Well, that big Wizard of Oz coin pusher that Elaut makes is $50,000. Why yes, you could have bought a car for that much money.

Prizes Drive Play. Period. Dot.

Some of the old prizes on the wall.  Before you have a heart attack over the prices, we were a nickel arcade.  The tickets weren't worth much, but you won a ton of them!
Some of the old prizes on the wall. Before you have a heart attack over the prices, we were a nickel arcade. The tickets weren't worth much, but you won a ton of them! | Source

Make a Rough Budget for Games


Step 2: Make a list of what games are in those top earnings polls. Pencil in what they’re going for used. Check and see what they’re bringing new. Put it all together and add 20%. That’s what you’ll need to get the games in, keep some common spare parts, and what-not.

Rotate Games Regularly!

Buying used games allows you to easily rotate your stock.
Buying used games allows you to easily rotate your stock. | Source

Explore the Game Auctions Options


Step 3: Start looking for game auctions. American Amusement Auctions, Super Auctions, and Michael Angelo Auctions are three of the ones that I’ve bought from. There are more out there, but I’ve never dealt with them. Visit a few of the auctions, see what the games are going for, and add $300 per game for repairs. Most of the time games are being sold at an auction because there’s a problem that their owners can’t find or repair. It’s not always true. A lot of the time they may just be older games, but they probably need the $300 spent on graphics replacement, anyway.

Parties Drive Business.

Parties bring most of the folks in your door.  Learn about them!
Parties bring most of the folks in your door. Learn about them! | Source

Find an Arcade and Evaluate it.


Step 4: Go look at an arcade. Can’t find one? Look some more? Really, you can only find one or two? What are their strong points? Generally they’re located next to theaters. That’s the strong point. What kind work? The kind like Chuck E. Cheese has where you vend tickets and trade them in for prizes work. That’s pretty much the whole list of games that make money. Nope, it ain’t all Defender and Donkey Kong anymore.

Food, Housing, Transportation: Add Food to the Mix


Step 5: What do people need? A place to live, a car to get them to work, and food to eat. Where does your arcade fall into this scheme? Nowhere? Ok, add some food. A short menu—pizza and sandwiches is the place to start. Start pricing used kitchen equipment. Add that to the list.

Attend a Foundation's Entertainment University


Step 6: Go to a Foundation’s Entertainment University. Frank Seninsky and the other presenters will teach you a thing or two about how a Family Entertainment Center works. Arcade plus food doesn’t quite make it to that level. Ponder some more: can you really make it work?

Go Real Estate Shopping


Step 7: Start looking at space. You need a place with enough room for games, a prize redemption area, several party rooms, a kitchen, a small dining area, and that is ADA compliant. I’d say you need 8,000 square feet minimum. You need it in a good location, not run down, not out of the way. High traffic, high income, high earnings potential…high rent. It isn’t pretty.

Are Franchises an Option for You?


Step 8: Look at what you’ve got on paper. Now consider some franchise options. Putt-Putt is offering franchises again. Chuck E. Cheese is doing the same. Mr. Gatti’s, Peter Piper Pizza, Incredible Pizza…the list goes on. It might work better for you. It will definitely be easier to put together with some rough plans. Franchises don’t want you to fail.

I Sell Toys for Toy Network, Call Me!

Really, if you're going to make a go of it, you need to buy some toys.  Call me.  Or at least send me a message.
Really, if you're going to make a go of it, you need to buy some toys. Call me. Or at least send me a message. | Source

Call Me, I Sell Redemption Toys


Step 9: You’re still here? Ok, well what I do for a living is sell toys to Amusement Parks, Carnivals, Arcades, FECs, and the like, give me a call. If you’ve made it this far, you’ll need a good idea of how to stock a redemption prize center and how to price the items.

Don't Do it Until You Understand What You're Doing. Period.


Really, I worked as a consultant for a while after I closed my arcade. My general advice was not to open projects. If I don’t see them as feasible, I’ll tell you so. Of the two projects I know that continued after I told them they shouldn’t, one told me that their only business comes on the weekends when birthday parties come in. The other is selling and repairing games to generate a large part of their income. It’s not the arcade that’s making money, it’s the ancillary businesses.

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    • Liz Green Berry profile image

      Liz Green Berry 4 years ago from TX

      Or my all time favorite: How to make a small fortune with an arcade... START OUT WITH A LARGE FORTUNE. :-)

    • DougBerry profile image
      Author

      DougBerry 4 years ago from Abilene, TX

      Hey, you can make money with a gameroom: it just has to be part of something else. Add food, more attractions, etc and it's do-able. It's just not cheap anymore.

    • krsharp05 profile image

      krsharp05 4 years ago from 18th and Vine

      I really like that you begin with solid advice - "don't" and then you follow up with information for the stubborn few who are destined to do it anyway. This is a wealth of information and seems very helpful. I know that birthday parties seem to be a big draw to businesses and repeat customers. -K

    • Sherry Hewins profile image

      Sherry Hewins 4 years ago from Sierra Foothills, CA

      Since you are the voice of experience, I think I'll take your advice and not open an arcade. Up and useful.

    • KevinTimothy profile image

      Kevin J Timothy 4 years ago from Tampa Bay, FL

      So, are you implying that this is once thriving concept is a dying breed? If so, I guess we can all thank the portable electronics market. These kids nowadays seem very content with being able to bury their noses in some type of "screen." As a matter of fact, my nine year old son is on his PSP as I am typing this comment.

      I can remember as recent as 1992 coin-op games being a HUGE thing. Everything must change, eh?

    • SidKemp profile image

      Sid Kemp 4 years ago from Boca Raton, Florida (near Miami and Palm Beach)

      I really admire this article. I write about issues like this from a general perspective all the time, and it is very refreshing to see the same key point - most business plans won't work - from the perspective of an industry expert. Many thanks! Voted up and interesting and shared to my business Twitter followers.

    • profile image

      josue 4 years ago

      i want to have a job where i drive around selling toys

    • profile image

      Steph 3 years ago

      Hey I have a wizard of oz machine but I cannot get the refills for the cards. As this is what the kids are collecting it's pretty much a dead game. I got it second hand

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